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- Cooling of food items like edible oil helped lower inflation in October.
- The CPI inflation fell to a three-month low of 5.02% in September.
- The data is on expected lines but
food inflation continues to be high, say economists.
India’s retail inflation eased to a four-month low of 4.87% in October, mainly due to cooling prices of food items, government data showed on Monday.
The Consumer Price Index (CPI) based retail inflation fell to a three-month low of 5.02% in September. The previous low inflation was recorded at 4.87% in June.
Economists said that the data has come on expected lines. “The food price index remained virtually unchanged at 6.6%. This indicates stable inflation but does not provide any comfort from the monetary policy stance and a cautious approach would be the way forward. The kharif shortfalls would manifest in the coming months as the harvest is one month old now,” said Madan Sabnavis, chief economist at Bank of Baroda.
The Reserve Bank’s Monetary Policy Committee (MPC), in its October meeting, projected CPI inflation at 5.4% for 2023-24, a moderation from 6.7% in 2022-23.
The government has tasked the RBI to ensure the CPI inflation remains at 4% with a margin of 2% on either side. The central bank mainly factors in the retail inflation while arriving at its bi-monthly monetary policy.
The edible oil effect
Food inflation continues to remain high even as the headline inflation numbers cooled, say economists. “Around 26% of the CPI witnessed high inflation in the food basket. The highest was for spices, pulses and cereals where it was in double digits. Eggs, fruits were other contributors to inflation,” Sabnavis said.
Edible oils provided a major decline at 13.7%. If this component is excluded, CPI would be as high as 5.6%.
(With PTI inputs)
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